PALO ALTO (AP) — Shares of Tesla Inc. fell just over 1 % in early trading Thursday after the electric vehicle and solar panel maker announced it would sell more than $2 billion worth of additional shares.
The move comes just two weeks after CEO Elon Musk said the Bay Area company had enough cash to fund its capital programs and it didn’t need to raise any more money.READ MORE: 6 Dr. Seuss Books Will No Longer Be Published Because of Racist Images
Tesla says that underwriters of the share sale have a 30-day option to buy another $300 million in common stock.
In its statement, Tesla says Musk will buy $10 million worth of the stock while billionaire board member and Oracle co-founder Larry Ellison will buy shares worth $1 million.
The Palo Alto-based company will use the proceeds to strengthen its balance sheet and for general corporate purposes.
Tesla currently has just over 180 million shares outstanding, and it says in filings with the U.S. Securities and Exchange Commission that the sale will add 2.65 million.READ MORE: COVID Reopening: Napa County Indoor Dining Can Resume With Red Tier Move; Wineries Continue Outdoor-Only
In a regulatory filing Thursday, the electric vehicle and solar panel company estimated that the net proceeds from the sale would be $2.31 billion if the underwriters exercise options to buy shares.
The numbers assume that the shares would be sold for $767.29 each, the closing price of the stock on Wednesday. Each additional dollar on the share price would add about $2.6 million to the proceeds, the filing said.
Since June of last year the stock has more than quadrupled in value and was trading at $750.67 just after the markets opened Thursday.
On the company’s fourth-quarter earnings conference call on Jan. 29, Musk was asked about raising capital since the stock had risen so dramatically.
Musk replied that the company was spending money as fast as it could spend sensibly, yet it’s still generating cash. “So in light of that, it doesn’t make sense to raise money because we expect to generate cash despite this growth level,” he told analysts.MORE NEWS: Bay Area Favorite Specialty's Cafe and Bakery Reopens In Mountain View
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